First Trading Experience with OptionsHouse

By Sun

I opened an OptionsHouse brokerage account a few weeks ago after noticing that it has lowered its online stock trade commission to $3.95/trade. That price beats what I currently get from other popular discount brokers, such as TradeKing, Firstrade, and even Zecco. However, since OptionsHouse requires some paperwork (such as a signed form and voided check, even though it used trial deposits to verify account ownership already) be sent in, the account was delayed several days (they even called me to let me know the account is available, which is nice).

Anyway, the account was successfully funded last week with $1,000 account minimum and I decided to test drive OptionsHouse to get a feeling how it works. I am glad I did it because there is something that I overlooked before opening the account left me a very bad taste of the broker.

I mentioned in my previous post that when I opened the account, it showed all quotes are delayed 20 minutes, which I thought doesn’t make any sense. It turned out that the account has to be funded in order to receive real-time quotes. Since now my account is funded, I indeed get stock quotes in real time.

The stock I wanted to buy yesterday was CIT Group (CIT), which has been in the news quite a lot lately because the government refused to bail the small business lender out. At the time when I entered my order, the stock was traded slightly higher than $1.25 a share, so I entered a order to buy $797 shares of CIT at limit price of $1.25/share. The total cost is $996.25. Since I already subtracted the commission cost of $2.95, the $1,000 in my account was enough to cover both the commission and the cost of the stock.

The next step is to preview my order before submitting it for execution. The preview page allows you to review details of the order. If, for example, you are placing a market order, which does not limit the price of the shares you want to purchase, the price of the stock may have already changed by the time you are ready to submit your order. And if the price has gone up already, you may not have enough fund to cover the transaction. With their real-time quote, it’s quite easy to determine whether an order can be executed or not based on the stock price. You will have a chance to change your order if this is the case. If everything is OK and you have sufficient fund in your account, you will be able to submit your order to have it executed.

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After I reviewed my order to make sure everything was fine, I submitted the order and the execution was almost instant (at least I didn’t notice any noticeable delay of the execution and since it was rather a small order in size, a delay of a second or two probably won’t matter if there is one).

Overall, the first trading with Options House went pretty smoothly. Given that their stock trading commission, now at $3.95 per trade, is the lowest among other discount brokers I have an account with, it makes sense to trade more often using Options House, especially for small orders (i.e., the total amount of the order is small) because that will reduce the percentage of the commission cost of the order.

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This is policy is ridiculous. And they are not straightforward on why a minimum balance of $100.00 is required in order to place a trade. People won’t be happy if they see they have to put down $100 to cover the commissions.

Thanks so much for your patience. I understand your frustration and appreciate the time you took to evaluate our platform and share your experience with others.

For a little bit of background on this issue, we originally instituted this policy to keep a balance of $100 in each account mainly to cover small margin calls that can be associated with large-volume option trading since, historically, this has been our core customer base. However, as we continue to grow, we are attracting a wider range of investors with different sets of needs so feedback like this is very helpful as we evaluate our policies to match the demands of a more diverse customer base.

Please know we are looking into the best possible way to move forward with regard to this policy and that it is in no way intended to punish our customers. While we need to consider what will be best for all our customers, I will do my best to make sure the issues you raise here are addressed as we move forward.

In the meantime, please feel free to reach out with any questions or additional concerns.

@Shannon: Thanks for stopping by. I can understand that brokers need some sort protections to protect themselves against possible losses with large volume of margin trades. However, I do think keeping $100 of customer’s money without doing anything is excessive for cash accounts that mainly trade stocks. I hope OptionsHouse can find a better way to address this issue and give investors the freedom and flexibility of using their money while enjoying the low cost.

ilikemoney | Aug 12, 2009 at 11:37 pm

They can create an advertisement that reads, “As long as you don’t take short positions, Optionshouse is the only broker that will protect you from losing 100% of the money you fund an account with. That’s right. No matter how shallow the market or your trading strategy goes, you can rest peacefully at night knowing that you’re going to have to take your final $100 to another broker if you’re truly hell bent on losing it all.”

ilikemoney | Aug 13, 2009 at 12:44 am

They can create an advertisement that reads, “As long as you don’t take short positions, Optionshouse is the only broker that will protect you from losing 100% of the money you fund an account with. That’s right. No matter how shallow the market or your trading strategy goes, you can rest peacefully at night knowing that you’re going to have to take your final $100 to another broker if you’re truly hell bent on losing it all.”

So if I’m planning on opening an account, sounds like I better have an extra $100 ready to donate

I just wanted to let you know that we lifted the $100 reserve requirement on all our accounts after careful consideration and input from customers like you. This change has actually been effective for more than a week. Thanks again for the feedback and please do feel free to keep in touch and let me know if you have any questions.

Now that I’ve been trading on optionshouse for the past week, I just wanted to mention a few things here. If you only trade stock then there’s no better place than this broker because their commission rate is extremely low ($2.95). Their streaming charts are not terribly detailed or as customizable as other brokers’ charts, but they get the job done.

On the other hand, if you’re primarily trading options, you should probably log into another broker at the same time for getting options data, because optionshouse does not provide realtime streaming options quotes. They currently only update option quotes every 5 seconds (which can sometimes make a huge difference when the activity on the underlying you’re trading is in the middle of some explosive activity). There’s a refresh button you can manually click on both the option chain screen and the actual order ticket screen, but after testing this for several days and talking to some of their reps, the refresh button does not update the bid/ask quotes any faster than the broker’s 5 second intervals. There’s also no level 2 data available, and if you want to see the last price that an option traded for, you have to add that strike price to your watchlist, since the option chain screen on optionshouse currently does not show you the last trade price. I discovered that you can also enter the option symbol into optionshouse’s streaming charts tool to see the last price and the high/low for the day on an option, but the thing about that is, optionshouse does not have option symbols listed anywhere on their platform, so you’ll have to get the symbols elsewhere.

While those drawbacks to using this broker might sound annoying to very active traders, don’t forget that options trades only cost you $9.95 here, regardless of the number of contracts. If you log into another broker for your realtime option data and level 2, while taking advantage of the optionshouse commission rate for placing the trades, you’re golden.

Alan | Aug 24, 2009 at 5:02 am

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Well done! I’m a big fan of your blog and be sure to keep up the great work.
I plan on returning and linking to your site.
Sincerely,
Alan H.

Ed Meshechek | Dec 17, 2009 at 1:26 pm

I am new at this online stock trading game, and my comment is, ” If you have any questions concerning online stock purchasing, don’t call for a customer rep at OH. They really don’t have more than about 1 minute for each phone call.” Makes a person wonder if when they open an account will they also have rude and time stamped customer reps to help? Oh and reading some of the other review posts, I saw where a OH stock trader was branded ” A Daytrader”. Is being a day trader a bad thing in trading stock? Thats what I intend to be. seems a brokerage house would want one to trade as offen as possible. Any comments would be appriciated. Thanks Ed M

philip | Dec 28, 2009 at 9:56 pm

If the 100 dollars was the only thing to worry about I would not care. I’m so frustrated with Options House. Their software will at times mess up the buying power numbers from Friday to Monday morning to reflect a large decrease (sometimes 20 thousand or more) in my buying power. This usually is not resolved until I call the brokerage on Monday and ask them to adjust the account. Last time I almost had to argue with the CSR in the Margin department that their software was again the problem (which it always is) and that my buying power is fine. I have even had a
false margin call once until I called about it.

Now I can’t get their MAXIT software to show what is a REALIZED GAIN and what is an UNREALIZED GAIN on 5 of my positions. I’ve had options expire worthless over a month ago, and it still shows as an unrealized gain. Better yet, I’ve emailed about this twice and all I get is a standard answer like “I’ve sent this to the Maxit department”.

The shame of it is that Options House has a lot to like about it in other areas. They have a nice layout of options prices which displays all of the call/puts prices on one page for a given security. They also seem to try to have good CSR in many instances.

OnlineBrokerReview | Jan 24, 2010 at 8:54 am

It’s good to see that OptionsHouse has changed this $100 requirement. I guess they got tired of customer complaints.

ron miller | Apr 13, 2010 at 9:47 am

i doubt very seriously that change came from customer complaints that they received; i bet it took complaints to FINRA, the IL Atty. General, the SEC, or some other law enforcement arm.

and they still utilize customer funds for their benefit – read about my experience, which I posted here on April 13, 2010.

Erik | Jan 25, 2010 at 12:58 pm

Maxit Tax software on the Options House site basically doesn’t work. I have inquired 3 times about major errors and keep getting told the matter has been sent to Maxit Tax and then get no further response from anyone. It is odd that Options House doesn’t take any responsibility for the program. I’m not sure why they have it up on their site.

I’m sorry you’ve been having trouble with Maxit. I checked with our customer service team and they reported sending you an email offering to work through the issues you were having over the phone. I am also happy to connect you with someone on our team who can assist you here. My email address is spaul[at]peak6[dot]com.

Many thanks,

Shannon Paul
Community Manager
PEAK6 Online, parent company of OptionsHouse

Thanks for stopping by Shannon! With your help, I know this issue can be resolved quickly

LUKE | Mar 11, 2010 at 7:47 pm

I have been with OptionsXpress for a few years now and have a Schwab Savings account. If you are new to options I would recommend OX due to there training materials and their tools. Their customer service is top notch and have been always willing to help me out if I had a question.
After you start trading a large amount of contracts OX can get VERY expensive and that is why I just opened a OptionsHouse account to trade spreads, mostly credit spreads. OptionsHouse just recently jacked up their flat rate to .15/contract + fee, however If you do the math its still a lot cheaper than OX.

The OptionsHouse layout impressed me, I liked how the options pricing guide was laid out with both calls/puts and for every month on one single screen, also you can trade directly from that screen. Very nice.

Now for my experience with OptionsHouse..

I opened a margin account with them 1 month ago with $3,000 to get a feel for the trading platform. On the application to open the account, it specifically asks what you
are going to trade, I put spreads/credit spreads, however when I got my account
cleared and funded I went to make my first trade and a error box came up and said my
account is not allowed to trade at that trading level. Keep in mind I have been trading options, spreads, credit spreads for years with OX. I then presented my case to their team for account approval and they said they would NOT upgrade my account trading level to trade a credit spread and that I could re-apply in 90 days. So now at this point, I was getting a little anxious and I sent a message to their customer service team and said basically this is what happened, I am very disappointed and this is what I want Ect…if I cannot get access to trade a protected spread with limited risk I need to cancel my account. I waited a few days for them to respond back to me and they never did, I just checked my bank account and they direct deposited all my money back to my bank account and that was it…there was no, we are sorry blah blah blah, nothing! I guess they do not like business and making money, now I understand $3k is not a whole lot of money however there would have been a lot more in there within the year. I would not recommend OptionsHouse to anyone due to their customer service.

If someone has some insight about my experience and has an explanation why I was treated the way I was, that would be great. My OptionsXpress account allows me to trade credit spreads, iron condors, Ect… I guess I will put some money back with them…however I wish their rates would go down.

(Note: I have updated my experience with OH beginning in the 4th paragraph, if that doesn’t detour you then you must be a masochist. Please do your homework! So far I have found recent reviews at http://moneyning.com/review/optionshouse-review/)

I trade stocks so I have no experience with their options tools, however, since I trade extended hours, futures information is extremely important AND they do not offer futures info.

Over the last 4 years I have used TD, Scottrade, Etrade, Schwab, Fidelity, OptionsXpress, and OptionsHouse; with the exceptions of Fidelity, Schwab and OptionsHouse, I found that each offered something that excelled above the others. HOWEVER, I have to say, that OptionsHouse is the most pathetic of them all. Although I experienced that every single one of them was deceptive in one way or another, OptionsHouse takes the cake. For me, it is simply not worth it to pay $2.95 a trade when you really can’t get the trades you want because of poor execution, mishandling of funds, extremely limited customer service and extended hour trading.

FURTHERMORE, just as stated by the initial poster of this blog thread, I found that OH practices “conversion” and “unjust enrichment” by withholding ACH deposits for 3-5 days after they have “cleared” or by holding your funds for 3-5 days after you request them (disregarding any settlement issues which would delay even further). As far as I am concerned, they are outright crooks.

Did I mention their stock trading tools are so elementary that they are virtually useless?

UPDATE: When I opened the account, I got 100 free trades; with 42 free trades remaining, I withdrew my funds for reasons stated above. However, in April 2010, I decided to give them another shot. Since I hadn’t used the account since Dec. 2009, I called to see if the account was still open and active and they said “yes”. On April 8, 2010, I utilized their online ACH transfer and initiated an ACH deposit; since we both utilize JP Morgan, OptionsHouse received the funds on April 9, 2010. Then, in an email that I received dated April 12, 2010, at 10:38 p.m. (presumable CDT since they are in Chicago), they tell me that the account will not be “reopened” AND that they will not return my funds until April 19, 2010.

In a nutshell, 1) they had closed the acct. but said it was open, 2) allowed me to do an online ACH deposit, 3) they received my funds on April 9, 2010, 4) now they say the acct. was closed and won’t be reopened, AND 5) they won’t return my funds until April 19, 2010. SO they use my money, for free, for 10 days! I trade between 10k – 40k shares of C usually several times a day and C has been on the move – you do the math.

Pete | Jul 14, 2010 at 1:59 pm

I had a really unpleasant with OH. Basically, there was a duplicate order when I was requesting electronic funding from my bank. Not only did I have to pay a NSF funds to my bank, but again had to pay a $30 fee to OH when they charged the duplicate order. In the end, any money I could have saved from their lower commission rate was offset by their unfair fee schedule, and problems with duplicate ACH processing.

I anticipate that I will most likely be leaving OH in the near future, due to their substandard customer service, and their attitude towards customer satisfaction. I felt like they couldn’t care less, and it is no surprise after reading that so many above customers have had unpleasant experiences with OH. I have only made a handful of trades with OH, but cannot say that the experience was pleasant.

I guess in the end, you get what you pay for; and with such low trading fees, they need to make money using any dirty tricks they can pull. BUYER BEWARE!!

Hoa | Sep 03, 2010 at 1:39 pm

This is the worst brokerage firm I have ever had(10+). Read their fee list and try out their virtual account before sending money to OptionsHouse.

MK | Oct 07, 2010 at 6:59 pm

I tried to do business with OptionsHouse.

The New Accounts Dept rejected an IRA beneficiary form for not having SSN for the beneficiaries. No problem, I had a new one witnessed and mailed to them the next day. Two days later, the Operations Dept, w/o any warning, email or phone call, emailed me that they were returning my IRA check. Even though I was in constant contact with their New Accounts Dept, and was told everything was fine, the Operations Dept obviously wasn’t in contact with the New Accounts Dept.

A classic case of the right hand not knowing what the left hand was doing.

But I really suspect OptionsHouse did me huge favor by giving me a preview of their customer service.

I believe our brokerage supervisor spoke with you earlier this week and this issue should be resolved. Please reach out to customer service or contact me at bmoon [at] optionshouse [dot] com if you have any other concerns or questions. Thank you.

Beth Moon
Senior Manager, Online Content
OptionsHouse, LLC

Casey | Dec 07, 2010 at 12:03 am

This site has provided great information regarding OptionsHouse, not only from the feature article but the many, great comments to follow as well! Thank you very much.

Ranger | Jan 11, 2011 at 12:19 am

Because of the low commission, I almost open account with OH. Now, I’m glad that I found this page! I guess OH still needs to work on their issues, systems. I believe I may still open an account with OH someday once they fix all their bugs and receive more positive reviews!

I think its a fair trade. They borrow your $100 on which they probably earn a higher interest rate than .01%, but on the other hand you get to pay only $2.9 in commission and I assume you get your tidy $100 back when you close the account. Sounds fair to me!
TradeKing doesn’t have that policy, but quotes are 15 min. delayed. LAME. fucking lame.

Rick | Feb 25, 2011 at 8:50 am

I’ve been with OPTIONSHOUSE for a year or so and there GREAT. I’ve had NO PROBLEMS in this period and have saved TONS OF CASH. I LOVE MY BROKER OPTIONSHOUSE. I buy when I want transfer cash when needed. After having others OPTIONS HOUSE is the BEST.

I am glad you like it. No doubt, Options House has made some great improvements since its first launch. At even $3.95/trade, it’s hard to beat in terms of trading commission.

Alan | Mar 14, 2011 at 4:06 pm

Worst customer service ever:
I have been with OH for a year and every time I call customer service they are very rude, they hang up on me because the guy (Scott) said he is busy!!!???(Maybe doing trading himself), and they never have a clear answer, I put a trade to execute right on market open but didn’t go through till 6min after??!! When I talked to Scott he said he don’t see it in the history and I was able to see it in my history??!! I talked to his manager named Paul and basically he just B.S-ed me. I think they won’t be busy anymore if their customer shrinking every day. I’m going to transfer all my account to different broker and won’t look back to OH EVER.

options trading | Apr 01, 2011 at 6:04 am

Thanks for adding your valuable information here. Really nice of you. Keep in touch and have a nice day ahead.

Rick | Apr 08, 2011 at 7:21 pm

I use OH and I like it. It’s a discount brokerage but when I’ve called customer service the response has been reasonable.

However – this year I need to use the MAXIT software, which seems to be completely incorrect (unrealized gains are wrong, as others have noted).

I wrote to OH. No reply after a week. A week later I wrote again and Scott told me they ‘lost’ the email and I should re-send it. I did and he replied that he’s submitted tickets to Maxit.

I’ll keep you posted; hopefully my experience with OH will continue to be good.

Rick | Apr 20, 2011 at 1:36 pm

Just to follow up: I spent 3 weeks trying to get OH to resolve this. Other than my one response from Scott, they didn’t respond to repeated emails, and Scott never provided any updates.

I ended up wasting a few days slogging through my transactions manually for verify the MAXIT calculations.

MAXIT had two issues: 1) It showed unrealized gains for some stock that was sold 2) Although the MAXIT Schedule D looked OK, when importing to TurboTax it would use odd share amounts, e.g. instead of 2500 shares it would do 2470.0003 and 29.9997. The totals were correct but I didn’t feel like submitting 2470.0003 shares to the IRS.

I finally gave up and transferred the account to TD Ameritrade.

TD Ameritrade integrates with Quicken, which saves me a lot of data entry (OH didn’t). And it uses GainsKeeper which imported into TurboTax correctly in about 1 minute.

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